CSR – A Game Changer for Building a Modern & Sustainable India
What sustains businesses? is the question we need to first ask in order to unravel the threads of Corporate Social Responsibility (CSR). The answer is ‘Natural Resources and Human Resources’. An obvious corollary of this answer is that businesses need to sustain both these precious resources so as to survive in an ever changing world.
India faces the grave danger of environmental disasters. The impacts of Climate Change are already being noticed in many parts of the country. To add to the conundrum of natural calamities, our population is also growing at an alarming rate with over a third of the world’s poor living in India. We are currently experiencing unprecedented problems like natural resource depletion, political unrest, rising unemployment and an economic slowdown with a weakening rupee. All these issues could possibly have been prevented had the government over the years since Independence built up healthier communities and more sustainable environments by involving the social and business sectors in the developmental goals of the country through effective CSR practices. The private sector has the financial capacity while the social sector of NGO’s have the expertise to passionately drive social change.
Recently the government has initiated various schemes in health, education, employment and food security in order to reach out to the underprivileged and facilitate their socio-economic development but they have failed to reach expected outcomes. It is apparent that public-private partnerships with the engagement of all key stakeholders could have achieved these results at a faster pace.
Finally, the old Companies Act, 1956 was replaced with the new Companies Bill, 2012 that mandates under Clause 135 a 2% spend on CSR by all companies with a net worth of Rs. 500 crores or more. Involving the private sector through mandating CSR spend is the first step in the right direction.
However, additionally the government needs to work on the following initiatives to optimize social change through CSR:
1) Development of tools and indices for reporting and evaluating the impact of CSR in a uniform way.An index is being prepared by the India Institute of Corporate Affairs and leading stock exchange BSE that would rank the companies in different bands and their performance would be monitored dynamically on the basis of their reporting of CSR.
2) Build a platform for bringing this information into the public realm. In this regard, Mr. Bhaskar Chatterjee, Director General & CEO of Indian Institute of Corporate Affairs, infact reiterates that “We want to give companies a national platform where they can showcase their activities. Many corporates are doing great work, and this should enable them to show in the public domain what they are doing.”
3) Disseminate best practices thro-ugh media coverage so that successful models can be emulated and serve as case studies.
4) Reward best practices through tax sops and awards which will act as a stimulus to ensure that CSR remains a vibrant field attracting healthy competition to develop highly sophisticated and refined projects that positive long-term outcomes.
5) Encourage educational and training institutes to start training courses on the CSR so that the next generations of CSR Heads are highly trained and skilled professionals with sound knowledge on this highly complex inter-disciplinary field that demands innovation and creativity.
One cannot do today’s job with yesterday’s methods and be in business tomorrow. New models of delivering CSR have to be envisioned with business strategies at the core of those models. We don’t have to choose between the environment and profit. We can do both. The IBM Institute for Business Value recently surveyed a group of 250 business leaders worldwide, finding that more than two thirds (68%) are focussing on CSR to create new revenue streams. In addition more than half (54%) of the surveyed business leaders believe that their companies’ CSR activities are already giving them an advantage over their top competitors.
Business Strategies that could be woven into the CSR initiatives from a sustainability perspective are:
1. Financial Benefits
An example of a carpet company that cleans up oceans of nylon fishing nets doesn’t sound a profitable venture. But when these very polluting fishing nets are recycled into making Econyl®, a first-grade nylon yarn used in making their carpets, it translates into financial benefits for the social venture company Aquafil Group where “sustainability isn’t a goal – it’s a way of thinking, a way of being”. One can think of any business and work out a social and environmental business strategy that yields high financial returns in the long run. For e.g. a company that deals in electronics can focus on e-waste collection and recycling which in turn becomes a revenue stream for the company. Real benefits come when managers begin to understand the profound difference between ‘cost cutting’ and ‘eliminating the causes of costs’.
2. Carbon Emission Reduction Benefits
More and more companies are signing up to the Carbon Disclosure Project (CDP) and report on their carbon emissions with strategies on ways reduces their carbon footprint. In Mumbai, an environmental organisation called Centre for Environmental Research & Education (CERE) has been innovating in the field of sustainability and corporate social responsibility through its Carbon Map & CapTM initiative. It ideates on a host of carbon reduction strategies that are profitable. Several leading Indian businesses including IndusInd Bank, Tata Capital Ltd., Apollo Tyres and Shapoorji Pallonji have been partners in this unchartered territory. In addition to helping companies report their progress through several non-financial reporting mechanisms, including GRI, CDP and NVG, CERE helps them push boundaries and become leaders in sustainability.
Apart from Carbon Map and Cap, CERE rolls out a range of smart strategies for capping carbon, unique amongst these are the employee engagement programs that are an essential component of any comprehensive CSR program – particularly one that focuses on environmental issues such as resource equity, energy conservation and efficiency and climate change mitigation. In its recent employee engagement program with Apollo Tyres, CERE was able to reach out to every employee from shopfloor workers to its top level executives, in all its manufacturing plants across India, thereby overcoming barriers of literacy levels, languages and cultures. The entire program was developed with quantifiable outcomes with an eye on moving entire communities around Apollo units towards sustainability.
For Carbon Neutrality, CERE has ideated that companies take up ‘farm forestry’ based afforestation programs. These farm forests would generate livelihoods for the rural people with market linkages adding to the revenue stream of the business. Such CSR models help augment food security for the nation even as they create rural livelihoods and lead to carbon neutral companies.
3. Brand and Image building
Customer and employee goodwill and trust drive profits and no amount of advertising can bring in the brand value and image building that a well-executed CSR initiative can garner for a company.
Weaving in all three above strands of People-Profit-Planet is a business imperative today. Creating a sound environmental and social value is an integral part of all businesses and this would fuel an entire new trend in business strategies.
If these are the future pillars of business, then businesses in turn would have to partner with every different kind of stakeholder and with NGOs to develop and deliver initiatives at ground zero. In fact, The Ministry of Corporate Affairs is working at an empanelment process that seeks to identify credible NGO’s and Social Enterprises with a proven track record of performance in the social development sector. Such a process would help companies locate implementation agencies that could be relied upon to deliver in diverse regions. Companies would, of course, be free to use any implementation agency of their choice; however, the process of empanelment would only be a service available to them, which they could use if they wanted. It is interesting to note that at present 67% of Indian companies have chosen NGOs as partners according to the results of a recent survey by the Associated Chambers of Commerce and Industry of India (ASSOCHAM). Change Makers, Social Entrepreneurs and Change Leaders are synonymous with NGOs as they all are driven by a passion to better the world. CERE (www.cere-india.org) is one such example of a new generation NGO which has been working with leading companies since the past 7 years to develop CSR policies and turnkey projects that have time and again proven that CSR can truly benefit people and planet while generating profits for companies in the long run.
“We have a responsibility to look after our planet. It is our only home.” The Dalai Lama.
“Successful companies can only create solutions to some of the world’s toughest problems by working collaboratively. Business must engage – with communities, governments, customers and each other.” Jeff Immelt, CEO GE